Half-truths and distortions in aviation subsidies campaign

I read with great interest the letter from Boeing’s Joris Vos, ‘The reality of civil aircraft subsidies’ (European Voice, 28 April-3 May). Once again, Boeing’s campaign of half-truths omits and distorts great swathes of fact as it tries to rewrite history and recast the situation according to its view of the world.

There is no truth whatsoever in Vos’s statement that European countries justified reimbursable loans to Airbus as necessary to support an infant industry. The bilateral 1992 Agreement on Trade in Civil Aircraft was signed in recognition that both US and European governments used different financial instruments vis-à-vis their civil aircraft industries, i.e. massive non-repayable 100% fully-funded research grants in the US, and reimbursable loans in Europe. If European loans to Airbus should only be granted during Airbus’s “infancy”, why is there no mention of this in the EU-US Agreement of 1992? Why is there no expiry clause? Even if Vos were right in saying that Airbus should no longer take out government loans, what is his justification for the multi-billion dollar subsidies Boeing continues to receive up to this day? After all Boeing has existed since 1916 and has been out of its infancy for a long time.

The principle of the 1992 Agreement was that the respective forms of financial instruments had to be balanced by effective disciplines. This is a principle that is just as valid today, especially considering that, since 1992, Boeing has benefited from approximately $15 billion (E11.9m) in US government grants specifically designed to reduce the risks of technological development for its civil aircraft. Moreover, Boeing is granted intellectual property rights to the valuable results of this research and the US government does not recoup anything in return for this government-funded commercial benefit. The Boeing 777 and the new 787 apply many of the

technologies that NASA and the US Department of Defence, among others, paid to develop.

Vos claims that Airbus has received $15bn in launch investment and that this is a “gift from taxpayers to Airbus”. Wrong again. Since 1992, EU governments have lent Airbus only about one-third of this amount. Over the same period, Airbus has repaid European governments billions of euro more than it has borrowed, at commercial interest rates, making Airbus a net re-payer, not a borrower. How much has Boeing repaid to the US government? Not one cent.

He also claims that Airbus has received infrastructure support for the A380. Where government investments in infrastructure have taken place, we pay commercial rents and tolls. On the other hand, Boeing, for the 787, will have roads, harbours, railways and other facilities built or modified for its exclusive use. These are production subsidies that are forbidden under the 1992 Agreement.

How much will Boeing reimburse to Washington State for the billions being invested to upgrade ports and roads to receive the 787?

Boeing is the major beneficiary of an illegal US tax scheme known as FSC/ETI, which has already twice been condemned by the World Trade Organization because it channels illegal export subsidies to the companies concerned. Between 1995 and 2004, Boeing has received a total benefit amounting to over $1.6 bn (e1.27bn).

Vos and his colleagues have succeeded only in reiterating the tired old allegations consistently used to justify the loss of Boeing’s dominance in the world’s large civil aircraft market. The reality of this reversal is that while Airbus invested its own funds and those of its shareholders in new product developments, Boeing has simply failed to invest. As a result Boeing sells less of its products.

That Boeing is now developing the B787 is due largely to billions of dollars of US government research funds, state tax relief schemes and Japanese government loans. The B787 is, as a consequence, now being dumped on the market at unprecedentedly low prices.

Whichever way you look at it, the scale of support received by Boeing is vastly greater than anything received by Airbus, and the loans that Airbus does receive are all repayable and go some way to rebalancing the massive support to Boeing. Yes, Airbus would strongly support a negotiated settlement to replace the 1992 Agreement that would re-establish balanced disciplines, but my advice to Boeing would be to look behind you before you twist the truth any further – you might find that it will come back to bite you.